NEW DELHI:Taxi companies including Ola and Uber are waiting for clarification on whether they need to continue paying entry and exit taxes while ferrying passengers across state borders after the goods and services tax regime starts on July 1.

“We still do not have clarity if the state entry/exit tax charged to cabs when crossing borders would go away after implementation of GST,” said Nilesh Sangoi, CEO of Meru Cabs.

State entry and exit taxes during trips are billed to passengers. The introduction of GST will subsume several central and state indirect taxes and will pave the way for a common national market.

“As GST is expected to convert the entire country into a seamless market, we are excited to see how the impact of the biggest indirect tax reform unravels across India’s economy,” an Uber India spokesperson said.

Cab companies are waiting for a “categorical clarification” on whether state entry and exit taxes will go away once GST kicks in.

“Fleet owners are waiting for categorical clarification from the government on this issue,” said Suresh Nandlal Rohira, a partner at Grant Thornton India LLP.

Some analysts said these taxes are a significant source of revenue for states and it will take time and effort to do away with them. A cess will be imposed on certain luxury goods to compensate states for revenue loss arising from implementing GST.

“The entry and exit taxes on state borders are levied by the road transport departments of each state and are a major source of revenue for them,” said Jaspal Singh, a partner at transport consultancy firm Valoriser Consultants.

Disruption of mainstream transport modes could see the online mobility market growing five times in terms of trips by 2020 in India, according to a report by Red-Seer, a research and advisory firm.

In the first quarter of 2017, overall cab bookings declined 5% after driver strikes across major cities in January and February and dropping consumer demand in terms of monthly active users for the leading players.

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In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.

In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.